Essentials of Economics 7th Edition by Gregory Mankiw

Exercise 13

Chloe takes $100 of currency from her wallet and deposits it into her checking account. If the bank adds the entire $100 to reserves, the money supply _________, but if the bank lends out some of the $100, the money supply _________.
A) increases, increases even more
B) increases, increases by less
C) is unchanged, increases
D) decreases, decreases by less